New figures from the Royal Institution of Chartered Surveyors (RICS) show tenant demand is booming, while the number of properties available to rent is falling.
The Perfect Storm for Higher Rents
The RICS Residential Survey paints a clear picture: tenant demand is up, with a net 11% of surveyors reporting an increase. On the other hand, 21% of surveyors saw a drop in rental properties available – a clear sign of a landlord exodus. This imbalance is pushing rents upwards, with 39% of surveyors expecting rent increases in the next few months.
Landlords Fleeing the Market
This perfect storm for landlords is being driven by several factors. The new Renters Rights’ Bill, which aims to protect tenants with tougher regulations and a ban on Section 21 evictions, is scaring some landlords. Many are worried about the potential for new capital gains taxes in the upcoming budget, making selling properties even more tempting.
Sarah Coles, head of personal finance at Hargreaves Lansdown, warns: “The government is promising new renter rights, but there’s no relief in sight for the shortage of properties or soaring rents. Landlords are leaving the market, and tenants are facing a tough time.”
Tom Bill, head of UK residential research at Knight Frank, adds: “The gap between supply and demand is widening. If the new laws for renters are too harsh, more landlords might decide to sell up. While protecting tenants is important, these new rules could lead to fewer rental properties and even higher rents, which is not a good outcome for renters.”
Simon Rubinsohn, chief economist of RICS, says: “While buyer interest is improving, it’s still from a low base. Affordability remains an issue, but the situation is far worse in the rental market, where stock levels are shrinking. Landlords are scaling back their portfolios, which is making the imbalance in the market even worse.”
The Big Picture
The numbers are clear: the rental market is skewed heavily in favour of landlords. Expect to see rents rise further as supply continues to dwindle.